Weakening dollar helps propel oil to 3-year high

Bloomberg

Oil just got an extra tailwind from a weakening dollar as this month is shaping up to be the best January for black gold in 12 years. That’s because when the greenback is losing value, investors tend to flock to commodities as a store of value, and this is coming on the back of a record streak of declines in American spare supplies of crude.
Futures climbed 1 percent in New York to their highest since December 2014, pushing this month’s gain to 9.5 percent. Meanwhile, the dollar was poised for its longest stretch of weekly declines since 2010. Crude stowed in US tanks and terminals has never been in more demand, as evidenced by the unprecedented 10-week drawdown on American inventories.
Oil traders are reacting to “US dollar movements,” Eric Nuttall, a portfolio manager with Ninepoint Partners LP in Toronto, said in a phone interview. “I’m encouraged that oil is better reflecting underlying fundamentals and an under-supplied market relative to last year, where it seemed to ignore those improving fundamentals for much of the year.”
As stockpiles dwindle in the US, the Organization of Petroleum Exporting Countries, Russia and other major producers have pressed on with supply caps amid robust demand.
JPMorgan Chase & Co. expects London-traded crude futures to approach the $78 level by the beginning of the second quarter.